Letters to the Editor

Missing Hero

To the Editor:

I cannot fathom why the greatest home-building CEO who ever lived, Robert Toll, dropped off your list ("The World's Best CEOs," Cover Story, March 26). Under Robert Toll's leadership, Toll Brothers became the first and still only nationwide home-building brand. And the brand has not been diminished at all during the current home-building downturn.

Toll Brothers has the best earnings-per-share and cash-flow "growth" among the public home builders the last four quarters (all home builders are negative). Toll Brothers' gross and operating margins remain the best in category over the same period.

Since the 2006 Best CEO list was published, the U.S. home-building business has gone from supercharged to wet firecracker. But the prescient and self-confident leadership of Bob Toll has grown from outstanding to superior. Toll Brothers did not get caught out with excessive land or spec-home inventory.

Lawrence Anvik Guilford, Conn.

Whipped or Cream?

To the Editor:

Regarding "A Latte Room to Grow," March 26: Analysis does not support a sudden improvement in Starbucks' fortunes. The stock sports a huge price/earnings ratio for a company whose growth is not accelerating, but falling. There's a serious increase in competition from McDonalds and Dunkin' Donuts. There's an increase in the price of coffee beans. Last but not least, there has been enormous insider selling.

The "Bottom Line" claim that as "same-store sales and profit margins improve, the stock could rally into the mid-40s" is a contradiction of the reality stated in the article. Same-store sales and margins are decreasing.

Dr. Gary Haber Delray Beach, Fla.

To the Editor:

The recent Starbucks article suggests that Starbucks once grew earnings faster; such growth will return; and the shares will achieve their higher legacy multiple. However, the facts suggest otherwise: (1) even with recent stock-price softness, Starbucks shares' free cash flow yield is well below the 10-year Treasury yield; (2) gross profit growth is meaningfully slower than revenue growth due to lower-margin international growth and domestic food sales growth that is outpacing higher-margin beverage growth; unlike in prior years, Ebitda growth was meaningfully slower than revenue growth in every quarter of 2006.

For a growth stock to achieve and maintain a P/E higher than its revenue growth rate, the company must have positive operating leverage, not the negative operating leverage that Starbucks' last four quarters show. The current P/E-to-Growth ratio of 1.4 seems risky.

Jim Lane TriPoint Asset Management Boston

Growth from What?

To the Editor:

Alan Abelson wrote that this is the worst employment growth that we've had during a recovery ("The Awful Truth," Up & Down Wall Street, March 26).

The odd thing about the last recession is that employment actually continued increasing, so there is really nothing to recover. It's the only recession since 1950 that did that. Even the short 1980 recession shed a few jobs. Another interesting thing about the last recession is that consumer credit expanded. That's never happened before, either. The good thing about recessions is that problems get corrected and assets reallocated. The last recession didn't really do that.

Craig Bowles Brooklyn

Hot Air

To the Editor:

I must take issue with your editorial on economic well-being taking precedence over reducing man-made carbon dioxide ("A Plea for the Planet's People," March 26). Just because the oil economy long ago entrenched itself to virtually control the world economy and environment doesn't mean we can't make meaningful changes in the way the world operates.

Imagine when five billion more people of the world achieve a "developed-world" standard of living. Pick your own time frame. On our present course, the planet would indeed be stripped of resources and increasingly warmer. Knowing what we have set in motion, a sharp tack in an eminently more sustainable direction seems not only reasonable, but necessary, inevitable, and what Buddhists would term "right action". What is needed is the "right intention." That's political will.

Sure, some of what Al Gore proposes is unthinkable at the moment. However, some of the proposals already exist in small measure. Hopefully, although not likely, the present discourse will be remembered in 50 years as a time when meaningful action, in terms of beginning to recognize and emphasize the numerous alternatives to oil, found its first firm footing -- to all our long-term benefit.

Brent Haleen Hailey, Idaho

To the Editor:

Hyperbole on Al Gore's part should not be met with hyperbole on our part. You write in a tone that suggests that "economic failure" is inevitable. I believe that a balanced tone is required. Nothing is inevitable in global warming or in Al Gore's 10-point plan. I would warn that the real risk is from "unintended consequences." There are scientific complexities and economic consequences that are outside of our ability to anticipate. If there are any certainties, and there aren't, we can be assured that we won't anticipate them.

How many times have solutions been advanced, and laws enacted, that solved one problem only to create another?

William B. Thomson West Hartford, Conn.

To the Editor:

If it were a trade-off between the economies of those who live in low coastal areas of the continents and those who live further inland, the global warming would be less dire. That is only a small part of the economic dislocations we face.

The economic dislocations will shrink economies throughout the world. If you truly consider all the direct and indirect costs of global warming, it greatly dwarfs the costs of remedies proposed by Mr. Gore.

Tom Owens Venice, Calif.

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